Press Release

House prices surge across Europe and China, and there's vibrant growth in Canada, New Zealand and parts of North Asia

Outside China, Europe is the epicentre of today's house price boom, with house prices rising during 2016 in no less than 18 of the 23 European housing markets for which we have figures. House price rises have also been strong in Canada, New Zealand and parts of Asia.

The five strongest housing markets in our global house price survey for the full year 2016 were: China (+21.34%), Iceland (+12.53%), Romania (+11.01%), Canada (+10.66%), and New Zealand (+9.47%).

During 2016, according to Global Property Guide research, house prices rose in 29 out of the 45 world's housing markets which have so far published housing statistics, using inflation-adjusted figures. The more upbeat nominal figures, more familiar to the public, showed house price rises in 32 countries, and declines in 13 countries.

Momentum. During 2016, 25 of the world's housing markets for which figures are available showed stronger upward momentum, while 20 housing markets showed weaker momentum. Momentum is a measure of the "change in the change"; simply put, momentum has increased if a property market has risen faster this year than last (or fallen less). The momentum data show clearly that the global housing boom is still getting stronger.

Inflation-adjusted figures are used throughout this survey. In the case of Kiev, Ukraine, the Global Property Guide adjusts using the official U.S. inflation rate since Ukrainian secondary market dwelling sales are denominated in U.S. dollars.

Analysis by continent: Europe super-vibrant

European house price rises continue unabated. Two of the three strongest housing markets in our global survey are in Europe, with rising house prices in no less than 18 of the 23 European housing markets for which figures were available during 2016.

Iceland is now the strongest housing market in Europe and second best performer in our global survey, amidst strong economic growth. Nationwide house prices rose by 12.53% during 2016, far above 2015's rise of 6.93%. This surge can be attributed to strong demand, coupled with limited housing supply, especially in the capital city of Reykjavik. Quarter-on-quarter, house prices in Iceland increased 4.04% q-o-q in Q4 2016.

Romania's average apartment price rose by 11.01% during 2016, due to a strong economy, after rising 7.74% in 2015. Prices fell slightly during the latest quarter (Q4 2016), falling by 0.26% q-o-q.

Estonia Average apartment prices in Tallinn continue their long upward march, rising by 7.36% during 2016, after rising 4.59% in 2015. Quarter-on-quarter, house prices in the capital rose by 1.4% in Q4 2016.

Other strong European housing markets included Norway, with house prices rising by 6.38% in 2016, followed by Slovak Republic (6%), Riga, Latvia (5.85%), Vilnius, Lithuania (5.07%), Sweden (4.6%), and the Netherlands (4.37%). However of these, only the Slovak Republic and Lithuania saw positive quarterly growth during the latest quarter. All, except Sweden, rose more in 2016 than the previous year.

Europe's weakest housing markets.Montenegro was the weakest housing market in our global survey. The price of dwellings in new residential buildings fell by 12.95% during 2016, a sharp turnaround from annual growth of 6.91% the previous year. House prices dropped by a huge 7.17% during the latest quarter. The sharp decline in house prices comes as a surprise because Montenegro is experiencing strong economic growth, increasing tourism, and because a law in 2015 allowed foreign buyers to obtain a residency permit upon purchase of a property. The house-price decline is likely related to weaker Russian buying interest.

Russia remains depressed, amidst struggling economy. Residential property prices plunged by 9.27% in 2016, a little better than last year's decline of 15.35%. Russia's house prices fell by 1.37% during the latest quarter,

Other European countries with house price falls included Kiev, Ukraine, with house prices falling by 3.34% in 2016, Macedonia (-0.95%), and Switzerland (-0.94).

Asia: China remains the best performer in our global house price survey

China was the world's strongest housing market in 2016, boosted by an earlier economic stimulus, while Japan's markets rose impressively. After a lacklustre performance the previous year, Hong Kong also rose strongly. Vietnam continued to post modest house price growth.

China's house prices surged after measures to support the housing market were introduced by the government. In Shanghai the price index of second-hand houses rose by 21.34% in 2016, a sharp improvement from a rise of 9.31% a year earlier and the highest annual rise since 2007. During the latest quarter, house prices in Shanghai rose by 1.48%.

However, house price rises in other Chinese cities are more muted. In Beijing, for instance, the price index for second-hand residential buildings rose by just 5.49% in 2016 from a year earlier, significantly lower than the double-digit price increases seen in Shanghai. House prices in Beijing increased 1.28% q-o-q in Q4 2016.

Japan's housing market rose strongly in 2016, despite a weak economy. In Tokyo, the average price of existing condominiums rose by 9.32% in 2016 from a year earlier, a sharp improvement from a meagre growth of 1.01% in the previous year. Residential property prices in the capital city increased 1.16% q-o-q in Q4 2016.

Hong Kong's residential property prices rose by 6.4% in 2016, after rising only 0.11% the previous year. During the latest quarter (Q4 2016), house prices rose by 2.88%.

Vietnam's housing market is gaining momentum, with property prices rising by 2.89% in 2016, after weak performances in recent years. However, Vietnamese house prices declined 0.23% q-o-q in Q4 2016.

Other Asian housing markets have lost steam. House prices fell in six of the ten Asian markets for which figures were available during 2016.

Mongolia had Asia's weakest housing market, despite signs of improvement. Nationwide house prices fell by 4.85% during 2016, after falling 10.22% in 2014 and 12.24% in 2015. House prices fell 0.84% during the latest quarter.

Singapore's housing market is still weak, amidst a fragile economy. House prices fell by 3.31% in 2016, largely the result of measures to curb speculation. House prices fell by 0.71% q-o-q during the latest quarter.

Taiwan's nationwide house prices fell by 3.01% in 2016, after falling 4.39% in 2015. House prices fell 1.78% q-o-q in Q4 2016.

In Indonesia, residential prices in the country's 14 largest cities fell by 0.89% during 2016, after falling 0.2% in 2015. House prices fell 0.37% q-o-q during the latest quarter.

South Korea's housing market is also weak, with the nationwide housing purchase price index falling slightly by 0.52% during 2016, after rising 2.25% the previous year. House prices increased 0.29% q-o-q during the latest quarter.

US house price rises moderating, while Canadian house prices are surging

The pace of price-rises in the U.S. housing market is slowing gradually, despite improving economic prospects. Canada meanwhile is in the middle of a house price boom.

The S&P/Case-Shiller seasonally-adjusted national home price index rose by 3.71% during 2016 (inflation-adjusted), the slowest pace since 2011. House prices increased by 0.55% during the latest quarter. This was supported by Federal Housing Finance Agency's seasonally-adjusted purchase-only U.S. house price index, which rose by 4.07% in 2016 (inflation-adjusted), down from an increase of 5.45% in 2015. The index dropped 0.15% in Q4 2016.

Canada's housing market rose strongly, despite repeated market-cooling measures. House prices in Canada's eleven major cities surged by 10.66% during 2016, more than double the 4.52% rise the previous year and the biggest annual increase since 2006. House prices increased 1.13% q-o-q in Q4 2016.

Latin America's housing markets continue to decelerate

Brazil's housing market continues to struggle. In Sao Paulo, house prices fell by 5.51% during 2016, after falling 7.37% in 2015. Quarter-on-quarter, house prices dropped 0.41% in Q4 2016, the ninth consecutive quarter of falling house prices.

Chile's housing market has weakened, with Greater Santiago average new apartment prices falling by 1.82% in 2016, in contrast with a rise of 4.4% in 2015. On a quarterly basis, house prices fell 3.69% in Q4 2016.

Mexico's nationwide house price index rose by 4.07% in 2016, a slight slowdown from an annual rise of 4.36% in the previous year. On a quarterly basis, house prices dropped 1.5% in Q4 2016.

Middle Eastern housing markets mixed

Israel and Egypt saw house price rises during 2016, while prices fell in Qatar and UAE.

Israel's house prices continue to head upwards, with the nationwide average price of owner-occupied dwellings rising by 5.36% during 2016, after rising 6.88% in 2015, 7.41% in 2014, 5.38% in 2013, and 4.12% in 2012. House prices increased 1.79% q-o-q in Q4 2016.

Egypt's housing market is now recovering, with the nationwide real estate index rising by 1.19% during 2016, after a decline 14.22% in 2015. However, house prices fell 4.44% during the latest quarter.

Dubai's residential property prices fell 1.64% in 2016, but this was a significant improvement from the 14.1% fall in 2015. House prices dropped slightly by 0.26% during the latest quarter.

New Zealand's house price rises are accelerating again, as post-earthquake rebuilding is bolstering the housing market. The nationwide median house prices rose by 9.47% during 2016, a sharp increase from a rise of 3.24% during the previous year. However, house prices dropped slightly by 0.22% q-o-q during Q4 2016.

Detailed country-by-country analysis:

Europe

Two of the three strongest housing markets in our global survey are in Europe. House prices rose in 18 of the 23 European housing markets for which figures were available during 2016.

Iceland is now the strongest housing market in Europe and second best performer in our global survey, amidst strong economic growth.

Iceland saw a housing boom from 2002 to 2007, with house prices surging by more than 73%. However house prices plunged by 32.5% from early-2008 to 2010, due to Iceland's extreme exposure to the global crisis. The housing market was quiet during the next three years, with house prices rising by a meagre 5%. Fuelled by growing demand, Iceland saw strong house price rises of 5.18% in 2014 and 6.93% in 2015, and 12.53% during 2016. This surge can be attributed to strong demand coupled with limited housing supply, especially in the capital city of Reykjavik. Quarter-on-quarter, house prices in Iceland increased 4.04% q-o-q in Q4 2016.

Iceland's economy was estimated to have grown by 5.9% in 2016, after expanding by 4% in 2015, 2% in 2014, 4.4% in 2013, 1.2% in 2012, and 2% in 2011, according to Statistics Iceland. The economy is expected to expand by 4.3% this year.

Romania's housing market continues to perform well, amidst strong economic growth and a construction boom. The average selling price of apartments rose by 11.01% during 2016, an improvement from a rise of 7.74% in 2015.

Romania's strong performance in the past two years is something of a rebound from dramatic price falls in previous years, but is also driven by strong economic growth.

House prices plunged by 24.22% in 2009, 22.08% in 2010, 6.99% in 2011, 5.96% in 2012, 10.43% in 2013, and 1.59% in 2014. It was only in 2015 that the housing market began to recover. The Romanian economy expanded by a robust 4.8% in 2016, up from 3.9% growth in 2015, in contrast to almost zero growth between 2009 and 2014. Romania's economy is expected to grow by a healthy 4.4% this year, according to the European Commission.

Ireland is considered by some to be Europe's austerity star performer, having introduced structural reforms early in the crisis and it is, according to this narrative, now reaping the benefits.

Residential property prices were up by 8.15% during 2016, after an increase of 4.47% in 2015. On a quarterly basis, Irish house prices increased 1.85 in Q4 2016.

The Irish economy is estimated to have grown by a healthy 4.3% last year, after growth rates of 26.3% in 2015, 8.5% in 2014, and 1.1% in 2013, according to the European Commission. Despite increased uncertainties related to Brexit and future US tax and trade policies, the economy is expected to remain firm this year with GDP growth of 3.4%.

Estonia. Average apartment prices in Tallinn rose by 7.36% during 2016, after rising 4.59% in 2015, 12.63% in 2014, 16.55% in 2013, 1.59% in 2012 and 8.33% in 2011.

Quarter-on-quarter, house prices in the capital rose by 1.4% in Q4 2016. The number of purchase-sale contracts of real estate increased 2% in 2016, while transaction values were up by 3.4%, according to Statistics Estonia. Estonia's economy grew by just around 1.5% last year, after growing 1.1% in 2015. The economy is expected to expand by 2.5% this year and by another 2.9% in 2018.

Germany. Long a picture of housing market stability, Germany was one of the few countries that avoided a house-price slump in the wake of the 2008-2009 global financial crisis. Since then, extremely low interest rates have encouraged demand. The German economy expanded by 1.9% in 2016, its strongest performance in five years and the fastest growth among the G7 states. Europe's largest economy is expected to expand by 1.6% this year, according to the European Commission.

Germany's housing market is now buoyant. The price index for apartments rose by 6.86% during 2016, after annual rises of 7.62% in 2015, 1.83% in 2014, 3.69% in 2013, 0.15% in 2012, and 3.39% in 2011. Apartment prices rose slightly by 0.89% q-o-q in Q4 2016.

Other strong European housing markets included Norway, with house prices rising by 6.38% in 2016, followed by Slovak Republic (6%), Riga, Latvia (5.85%), Vilnius, Lithuania (5.07%), Sweden (4.6%), and Netherlands (4.37%). However, only Slovak Republic and Lithuania saw positive quarterly growth during the latest quarter. All, except Sweden, rose more in 2016 compared to a year earlier.

European housing markets with smaller house price rises included Portugal with house prices rising by 3.88% in 2016, Istanbul, Turkey (3.4%), UK (3.28%), France (1.31%), Finland (0.39%), Spain (0.1%), and Greece (0.03%). Only Portugal and France recorded positive quarterly growth during the latest quarter. All, except Portugal, Turkey, and the UK, rose more in 2016 as compared to a year earlier.

European countries with slight house price falls included Kiev, Ukraine, with house prices falling by 3.34% in 2016, Macedonia (-0.95%), and Switzerland (-0.94%). Switzerland recorded positive quarterly price change of 0.25% during the latest quarter. In contrast, Macedonia and Ukraine saw negative quarterly price changes of 1.24% and 0.39%, respectively. All performed worse in 2016 compared to a year earlier.

Europe has the two weakest housing markets in our survey: Russia and Montenegro

Montenegro is now the weakest housing market in our global survey, which is surprising, because Montenegro's economy has experienced its fastest economic growth since 2008, growing by more than 5% last year, though growth is expected to slow to 3.6% this year, according to the IMF.

The housing slowdown is likely caused by weak Russian buyer interest. The price of dwellings in new residential buildings fell by 12.95% during 2016, a sharp turnaround from the previous year's house price rise of 6.91%. House prices dropped by a huge 7.17% during the latest quarter.

Russia. Russia's high inflation rate is the reason for the substantial difference between the nominal decline in Russian house prices (-4.09%) and the real decline (-9.27%). However, this is better than last year's house price decline of 15.35%. Russia's house prices fell by 1.37% during the latest quarter.

From the perspective of foreigners the decline in the value of Russian property has been much greater. The ruble has lost almost 47% of its value against the US dollar in just three years, from an exchange rate of RUB32.871= US$1 in December 2013, to RUB61.95 in December 2016.

Interest rates are high. In February 2017, crude oil prices were still 48.2% down from US$106.1 per barrel in June 2014. However in 2016, Russia's economy showed some signs of improvement, with GDP falling by just 0.2%, after contracting by 3.7% in 2015, according to the IMF. Inflation was 5% in January 2017, and is expected to have slowed to 4% by end-2017. The Russian economy is expected to grow by 1% this year and by another 1.2% in 2018, according to the IMF.

Detailed country-by-country analysis:

Asia

Core North Asia has had impressive house price rises

China's housing marketremains the best performer in our global house price survey, after measures to support the housing market were earlier introduced by the government. In Shanghai the price index of second-hand houses surged by 21.34% in 2016, a sharp improvement from 9.31% a year earlier, and the highest annual rise since 2007. During the latest quarter, house prices in Shanghai rose by 1.48%.

House price rises in other Chinese cities are more muted. In Beijing, for instance, the price index for second-hand residential buildings rose by just 5.49% in 2016, significantly lower than the double-digit price increases seen in Shanghai. House prices in Beijing increased 1.28% q-o-q in Q4 2016.

Nevertheless the value of housing transactions in China surged by more than 36% in 2016 to RMB9.9 trillion (US$1.4 trillion). Local real estate experts are quick to warn that housing starts need to remain restrained to absorb the country's overhang of unsold properties. To cool the housing market, in September 2016 the government raised the minimum downpayment threshold for non-locals, and stopped property companies issuing domestic bonds. The central bank kept its benchmark one-year lending rate at 4.35% in February 2017, after cutting it five times in 2015.

The Chinese economy grew by 6.7% during 2016, its slowest growth for 26 years, despite a string of government stimulus measures to shore up demand. The Chinese government has a GDP growth target of 6.5% this year.

Japan’s housing marketrose stronglyin 2016, despite a weak economy. In Tokyo, the average price of existing condominiums rose by 9.32% in 2016, a sharp improvement from a meagre growth of 1.01% in the previous year. Residential property prices in the capital city increased 1.16% q-o-q in Q4 2016.

Demand continues to rise. Existing condominium sales in Tokyo rose by 7% in 2016, according to The Land Institute of Japan. Likewise, sales of existing detached houses in Tokyo also increased 8.7%. The Japanese economy grew by an annualized rate of 1% in 2016, slightly lower than market expectations but up from a GDP growth rate of 0.5% in 2015. The world’s third largest economy is expected to grow by 1.5% for fiscal year 2017, according to the Bank of Japan. From a US$-based investor's perspective, the Japanese residential market's gains was bolstered by the 9.6% appreciation of the Japanese Yen from ¥123.725 = US$1 in June 2015, to ¥112.914 = US$1 in February 2017. However, this is not enough to offset the 31% drop in the value of yen against the dollar from 2012 to 2015.

Hong Kong's residential property prices rose by 6.4% in 2016, after meagre growth of 0.11% the previous year. During the latest quarter (Q4 2016), house prices increased by 2.88%.

However sales are expected to remain weak in the coming months. In November 5, 2016 an increase in stamp duties for all property transactions, except for first-time local buyers. The number of property transactions fell by 2.3% in 2016, according to the Ratings and Valuation Department (RVD).

Hong Kong's economy grew 1.9% in 2016, after growth of 2.4% in 2015, 2.7% in 2014, 3.1% in 2013, and 1.7% in 2012, according to the Census and Statistics Department. The economy is expected improve this year, with projected GDP growth of 2% to 3%.

Vietnam’s housing market is gaining momentum, fuelled by increasing construction, a booming economy and the recent introduction of the housing laws that allow foreigners and overseas Vietnamese to legally own, sell and transfer real properties.

The Vietnamese economy expanded by 6.2% in 2016, slightly down from a growth rate of 6.7% in 2015, but still the fastest rate in the ASEAN.

Property prices in Vietnam rose by 2.89% in 2016, after rising 0.86% in 2015 and 1.32% in 2014, and the annual declines of 1.24% in 2013, 6.42% in 2012, 2.91% in 2011, and 1.76% in 2010. However, house prices declined 0.23% q-o-q in Q4 2016.

Other Asian housing markets continue to lose steam

House price fell in six of the ten Asian markets for which figures were available during 2016.

Mongolia's nationwide house prices fell by 4.85% during 2016, less than the declines in 2014 and 2015 of 10.22% and 12.24%, respectively. House prices dropped 0.84% during the latest quarter.

Why? Weak economic growth. Mongolia's economy grew by a meagre 0.04% in 2016, sharply down from earlier spectacular growth rates: 2.4% in 2015, 7.9% in 2014, 11.6% in 2013, 12.3% in 2012, 17.3% in 2011, and 7.3% in 2010, according to the IMF. External debt is rising, budget revenues are falling and commodity prices are low. The economy is projected to expand by only 1% this year and by 3.5% in 2018.

Singapore's housing market is still weak. House prices fell by 3.31% in 2016, after declines of 3.05% in 2015, 3.97% in 2014, and 0.37% in 2013. House prices fell by 0.71% q-o-q during the latest quarter.

Despite this, demand is now rising. New private residential units sold in 2016 were up by 7.2%, according to the Urban Redevelopment Authority. Supply is also increasing however, with the number of uncompleted private residential units launched up 11.6% in 2016.

Singapore's economy expanded by a modest 2% in 2016, a slight improvement from 2015’s 1.9% growth.

Taiwan's house prices continue to fall after dramatic government measures to curb speculative house purchases, and a sharply slowing economy. Property transactions in Taiwan fell by 16.1% in 2016, the lowest level since 2001, according to the Ministry of Interior. Nationwide house prices fell by 3.01% in 2016, after a decline of 4.39% in 2015 and annual rises of 1.26% in 2014, 14.46% in 2013, 7.72% in 2012, 8.2% in 2011, and 13.2% in 2010. House prices dropped 1.78% q-o-q in Q4 2016.

However in the first two months of 2017, housing transactions in the country’s six metropolitan areas (Taipei, New Taipei, Taoyuan, Taichung, Tainan, and Kaohsiung) rose by almost 50% to 27,900 units from the same period last year.

Taiwan's economy grew by 1.5% 2016, after GDP growth rates of 0.65% in 2015, 3.9% in 2014, 2.2% in 2013, 2.1% in 2012, 3.8% in 2011, and 10.6% in 2010, according to the Directorate-General of Budget, Accounting and Statistics (DGBAS). The country's GDP growth is expected at 1.92% this year, boosted by recovering exports and government stimulus measures.

Thailand's property market is losing steam. Nationwide house prices dropped 1.07% in 2016, after rises of 1.98% in 2015, 5.32% in 2014, 3.25% in 2013, and 4.05% in 2012. House prices dropped 2.08% q-o-q in Q4 2016.

Thailand's economy was estimated to have grown by 3.2% last year, after GDP growth of 2.8% in 2015, 0.8% in 2014, 2.7% in 2013, and 7.2% in 2012, according to the IMF. Economic growth is projected at 3.3% this year and 3.1% in 2018.

In Indonesia, residential prices in the country's 14 largest cities fell by 0.89% during 2016, after a decline of 0.2% in 2015 and annual increases of 0.39% in 2014, 2.93% in 2013, 2.27% in 2012. House prices dropped 0.37% q-o-q during the latest quarter.

Demand continues to weaken sharply and total supply growth is expected to slow in the coming years. Indonesia's economy grew by 5.02% in 2016, after GDP growth of 4.88% in 2015, 5% in 2014, 5.6% in 2013, 6% in 2012, and 6.2% in 2011, according to the Badan Pusat Statistik Indonesia. The economy is expected to grow between 5% and 5.4% this year, according to Bank Indonesia.

South Korea's housing market is also weak, with the nationwide housing purchase price index falling slightly by 0.52% during 2016, in contrast to the rise of 2.25% a year earlier. House prices increased 0.29% q-o-q during the latest quarter.

Korea's economy grew by 2.7% in 2016, after growth of 2.6% in 2015, 3.3% in 2014, 2.9% in 2013, 2.3% in 2012, and 3.7% in 2011, according to the Bank of Korea. Economic growth is expected at 2.6% this year, based on government estimates.

Detailed country-by-country analysis:

Americas

U.S. house price rises moderating, but sentiment strong

The S&P/Case-Shiller seasonally-adjusted national home price index rose by 3.71% during 2016 (inflation-adjusted), the slowest pace since 2011. House prices increased by 0.55% during the latest quarter. This was supported by Federal Housing Finance Agency's seasonally-adjusted purchase-only U.S. house price index, which rose by 4.07% in 2016 (inflation-adjusted), down from an increase of 5.45% in 2015. The index dropped 0.15% q-o-q in Q4 2016.

House prices continue to rise in all 20 major U.S. cities, according to the Case-Shiller index, with Seattle registering the biggest inflation-adjusted increase of 8.53% in 2016, followed by Portland (7.81%), Denver (6.7%), Tampa (6.16%), Dallas (5.9%), Miami (4.65%), Boston (4.18%), Detroit (4.14%), and Atlanta (4.08%).

New York saw the lowest growth in inflation-adjusted house prices at 0.98%.

Residential construction activity remains strong. New privately-owned housing units authorized rose by 8.2% y-o-y to a seasonally adjusted annual rate of 1,285,000 units in January 2017, according to the U.S. Census Bureau. Over the same period, the total number of housing starts rose by 10.5% to a seasonally adjusted annual rate of 1,246,000 units while completions fell slightly by 0.9% to 1,047,000 units.

Demand continues to rise. New house sales were up by 5.5% seasonally adjusted in January 2017, compared to the same period last year, according to the U.S. Census Bureau.

U.S. homebuilders remain bullish, given the shortage of existing homes for sale, coupled with the promise of the Trump administration to cut regulation that will make it easier to purchase and build a home. U.S. homebuilder sentiment stood at 65 in February 2017, down from 67 in the previous month but substantially up from 58 in a year earlier, according to the National Association of Home Builders. A reading of 50 is the midpoint between positive and negative sentiments.

The U.S. economy grew by just 1.6% in 2016, its slowest growth since 2011, according to the U.S. Department of Commerce. The world’s biggest economy is expected to expand by more than 2% this year, boosted by huge tax cuts and increased infrastructure spending, as well as less regulations.

Canada's housing market accelerating

House prices in Canada's eleven major cities surged by 10.66% during 2016, despite repeated market-cooling measures. This was more than double the 4.52% rise the previous year and the biggest annual increase since 2006. House prices increased 1.13% q-o-q in Q4 2016.

Home sales increased 6.2% in 2016, according to the Canadian Real Estate Association (CREA), rising in about two-thirds of all local markets, including in the Greater Toronto Area, Calgary, Edmonton, Montreal, and London and St. Thomas. There were about 4.6 months of inventory on a national basis in January 2017, the lowest level in almost 6 years and an indication that the housing market continues to tighten.

The Bank of Canada held its key interest rate unchanged at 0.50% in January 2017, amidst the increased economic and political uncertainty associated with the U.S.’ potential policy changes. The key rate had previously been 1% from September 2010 to December 2014. The central bank will likely hold the key rate unchanged until the first quarter of 2018.

Canada's economy grew by 1.4% in 2016, an improvement after meagre growth of 0.9% in 2015, buoyed by strong household consumption, according to Statistics Canada. The economy is expected to expand by 1.9% this year and by another 2% in 2018, according to the IMF.

South America’s housing markets continue to decelerate

Brazil. In Sao Paulo, house prices fell by 5.51% during 2016, after falling 7.37% in 2015 and rising only 0.83% in 2014. Quarter-on-quarter, house prices dropped 0.41% in Q4 2016, the ninth consecutive quarter of falling house prices.

House prices in Sao Paulo had soared by 113% (inflation-adjusted) from 2007 to 2013, while Rio De Janeiro's rose by 144%.

The crisis started in the first half 2013 the central bank raised the benchmark interest rate nine times to 11% in April 2014, causing a sharp economic slowdown. It raised rates again by 25 basis points in October 2014, and by 50 basis points in December 2014, and then five times in 2015 to 14.25%, the highest level for almost six years.

Brazil's economy was plunged into the country's worst and longest recession in more than a century. It shrank by 3.4% in 2016, after contracting by 3.9% in 2015 and 0.1% in 2014, according to the OECD. Brazil’s 2017 growth projection has been cut by the IMF to just 0.2%. By December 2015, the Brazilian Real (BRL) had lost about 32% of its value against the U.S. dollar to reach an average monthly exchange rate of BRL3.8828 = USD1 as compared to BR2.6426 = USD1 in December 2014. However in the past 14 months, the real recovered by almost 30.6% to reach an exchange rate of BRL3.1063 = USD1 in February 2017.

The country is in the midst of immense political turmoil. Over the past seven months, President Dilma Rousseff was impeached following the massive Petrobras corruption scandal, the speaker of the house has been jailed, and five Cabinet ministers have been removed or allowed to step down because of allegations of corruption. Brazil's new president, Michel Temer, is also embroiled in a new corruption scandal, accused of exerting pressure to assist a top political ally in a property deal.

Unemployment was at record 12.6% in January 2017, according to the country's statistics agency, IBGE. Fitch Ratings has recently downgraded Brazil's sovereign rating to junk with negative outlook, in line with the other two major rating companies.

Chile's housing market has weakened sharply, with the average price of new apartments in Greater Santiago falling by 1.82% in 2016. This was in sharp contrast with the annual rises of 4.4% in 2015, 11.7% in 2014, 4.24% in 2013, 5.54% in 2012, 9.47% in 2011, and 4.51% in 2010. On a quarterly basis, house prices dropped 3.69% in Q4 2016.

In 2016, VAT of 19% was imposed on sales of properties by "habitual sellers" such as real estate companies, and on legal or natural persons who purchase and sell their properties in a span of less than one year.

Chile's economy grew by about 1.7% in 2016, after growing by 2.13 in 2015, 1.8% in 2014, 4% in 2013, 5.5% in 2012, and 5.8% in 2011, according to the IMF. The economy is expected to expand by 2% this year and by 2.7% in 2018.

Mexico's housing market is cooling gradually. The nationwide house price index rose by 4.07% in 2016, after rising 4.36% the previous year. On a quarterly basis, house prices dropped 1.5% in Q4 2016.

From the perspective of foreign homebuyers the slowdown in property prices is greater, because of the peso's sharp depreciation in recent months. In 2015, Mexico's peso slumped against the US dollar by about 15%, the biggest annual decline since 2008. In February 2017, the peso depreciated further by around 16% from December 2015, with an exchange rate of MXN20.3039 = USD1.

The Mexican economy grew by 2.3% in 2016, after growth of 2.5% in 2015, 2.2% in 2014, 1.4% in 2013, 4% in both 2011 and 2012, and 5.1% in 2011, according to the Instituto Nacional de Estadistica y Geografia (INEGI). The economy is expected to expand between 1.5% and 2.5% this year.

Detailed country-by-country analysis:

Middle East

Israel and Egypt saw moderate house price rises during 2016 while prices fell in Qatar and UAE.

Israel's housing market remains buoyant, with the nationwide average price of owner-occupied dwellings rising by 5.36% during 2016, after rises of 6.88% in 2015, 7.41% in 2014, 5.38% in 2013, and 4.12% in 2012. House prices increased 1.79% q-o-q in Q4 2016.

Demand and supply are both falling. After a more than 40% growth in 2015, new dwelling sales fell by 7% y-o-y to 27,133 units in the first eleven months of 2016, according to the Central Bureau of Statistics (CBS). The number of new dwellings for sale increased 19.2% to 31,150 units in November 2016. Dwelling starts dropped 0.8% y-o-y to 12,777 units in Q3 2016 while dwelling completions fell by 3.8% to 10,535 units over the same period.

Israel's economy grew strongly in 2016, with a GDP growth rate of 4%, according to the CBS, after growing by 2.6% during both 2014 and 2015, 3.3% in 2013, 2.9% in 2012, and 5% in 2011, thanks to stronger exports, consumer spending and investment. The economy is expected to expand by 3.2% this year and to another 3.1% in 2018, according to the Bank of Israel. The Bank of Israel kept its benchmark interest rate at a record low of 0.1% in February 2017, in an effort to boost economic growth while maintaining price and financial stability.

Egypt's housing market is now recovering, with the nationwide real estate index rising by 1.19% during 2016, a substantial turnaround from an annual decline of 14.22% in 2015. However, house prices dropped 4.44% during the latest quarter.

In an effort to buoy the property market, President Abdel Fattah el-Sisi recently ratified Law 17/2015, removing the last remaining restrictions on foreign ownership of land and property in Egypt, and introduced rules allowing the government, the biggest landowner in Egypt, to contribute land to the private sector as part of public-private partnership schemes against a share of the revenue.

Egypt's economy grew by 4.3% in 2016, the highest growth in 6 years, on the back of strong private consumption and investment in energy, real estate and infrastructure, according to BNP Paribas. The economy is expected to grow by 3.8% this year and by another 4.5% in 2018.

Property demand in Qatar is falling sharply, after the value of real estate transactions reached an all-time high in 2015, boosted by a construction boom in preparation for the 2022 FIFA World Cup. In 2016, however, the total value of real estate transactions plunged by about 50% to QAR56 billion (US$15.3 billion), according to Ezdan Group. The Qatari economy grew by a modest 2.6% last year, after growing by an annual average of 4.2% during 2012-15, and 15.7% in 2008-11, according to the IMF. The economy is expected to expand by 3.3% this year, better than most of its regional peers.

Dubai's residential property prices dropped 1.64% in 2016, a significant improvement from the price decline of 14.1% in 2015. House prices dropped slightly by 0.26% during the latest quarter.

Dubai's property market has been one of the world's most volatile. Dubai saw one of the world's worst housing crashes from Q3 2008 to Q3 2011 with house prices plunging by 53%. The market started to recover in 2012, with double-digit house price increases from Q2 2012 to Q4 2014.

However, the property market began to slow in the second half of 2014, amidst housing oversupply, subdued demand and slower economic activity. Real estate transactions dropped 3% to AED259 billion (US$70.54 billion) in 2016, according to the Dubai Land Department. UAE's economic growth slowed to 2.3% in 2016, after GDP growth of 4% in 2015, 3.1% in 2014, 4.7% in 2013, 7.1% in 2012 and 4.9% in 2011, according to the IMF. Abu Dhabi is projected to expand by 1.7% this year while Dubai will grow by 3.6%. For the country as a whole, UAE is expected to see a GDP growth of 2.5% this year.

New Zealand's house prices continue to rise strongly

New Zealand's house price rises are accelerating again, as post-earthquake rebuilding is bolstering the housing market. The nationwide median house prices rose by 9.47% during 2016, a sharp increase from growth of 3.24% the previous year. However, house prices dropped slightly by 0.22% q-o-q during Q4 2016.

However demand continues to fall, mainly due to the introduction of new lending restrictions in October last year. Total dwellings sold were down 15.2%, according to the Real Estate Institute of New Zealand (REINZ).

Most of New Zealand's ten regions recorded sales volumes declines. Waikato/Bay of Plenty registered the biggest y-o-y drop of 25.1% in January 2017, followed by Auckland (-18.5%), Wellington (-10.8%) and Canterbury (-8.4%). The decline in sales can also be attributed to shortage of housing inventory across the country, with 3,743 fewer houses for sale in January 2017 compared to the same period last year. Building consents for new homes rose modestly by 3.4% to 1,752 units in January 2017 from a year earlier, according to Statistics New Zealand.

New Zealand's economy grew by about 2.8% in 2016, after growing by 3% in 2014 and 2015, 1.7% in 2013, 2.8% in 2012, 1.8% in 2011 and 2% in 2010. The economy is expected to expand by 3.6% this year and by another 3.5% in 2018. The Reserve Bank of New Zealand (RBNZ) left the official cash rate (OCR) unchanged at a record low of 1.75% in February 2017, after cutting it by 25 basis points in the wake of Donald Trump's unexpected US election win.

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